06Jun10:33 amEST

Just Because They're Not Peacocking Doesn't Mean They're Not Bullish

It has been a quiet spring for agribusiness and chemical stocks, which are mostly housed in the XLB sector ETF. The U.S. Dollar rally has been one headwind for them, as the market's general knee-jerk reaction is to lay off most materials and commodity plays when the Dollar surges, with some exceptions here and there. 

But now that the Dollar is backing off ever-so-slightly, it is likely instructive to take a more careful look at which XLB names have held up best as we head into summer trading. 

Minnesota-based Mosaic, which is the largest U.S. producer of potash and phosphate fertilizer, has basically been the exactly opposite of an ostentatious peacock this year, quietly basing along $28-$29 resistance since January. 

On the one hand, you might argue that type of price action is natural and not worth much attention. Then again, plenty of other materials and commodity stocks suffered deeper corrections during that time, which means MOS exuded impressive relative strength, as seen on the Mosaic daily chart, below.

More importantly and actionable for us is that once the sector at-large sustains a rotation, MOS ought to be a leader due to its impressive setup and relative strength this year.

Indeed, bulls continue to probe well-defined resistance without much in the way of rejection. And if the Dollar keeps backing off while the global material mining complex regains its footing, I expect Mosaic to break through and see a rather quick move into the $30s--Even if it is to little fanfare, contrasted to the peacocking technology stocks. 

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